If a borrower defaults on their debts or fails to make the scheduled loan payments, the creditor will report that default to a credit bureau. Then, not only is the borrower`s credit history darkened, but their debts are also forgiven to a collection agency within three to six months of default. If the borrower still cannot or cannot cover their arrears, the collection agency may update the borrower`s credit report with a “collection” status, resulting in a decline in the person`s credit score. A low credit score can hurt a person`s chances of getting a long-term loan, as a debt collection account can stay on their credit report for up to seven years. This exam list is provided to inform you about this document in question and to help you in its preparation.